Tyler v. Scott

The opinion of the court was delivered by Royce, J. The first question presented by the report of the auditor is, whether the contract which the auditor has found was entered into between the plaintiff and Dow in 1865, and which was continued until the spring of 1869, constituted a partnership. All that is generally required to constitute a partnership as between the parties, is, that there should be an agreement to’share in the profit and loss; and even less than this may make them responsible as partners as between themselves and third parties. It is not necessary that the partners should contribute equally to the capital invested, or that the share of profit and loss should be equally proportibned. The contract between these parties was, that after paying Tyler ten per cent, out of the profits of the business for his stock invested, the remainder of the profits were to be divided equally between them. This, it seems to us, was an agreement to share in the profit and loss of the business; for the profits to be divided would be what remained after deducting the amount of losses that had been sustained. The fact that the plaintiff and Dow were partners being established, the case falls within the rule laid down in Fay et al. v. Green, 1 Aik. 71*; Strong v. Fish, 13 Vt. 277; and Eaton et al. v. Whitcomb, 17 Vt 641†; unless it is excepted from its operation, by the notice which the auditor finds was given to the defendant by the plaintiff previous to the contract made between Dow and the defendant. Ordinarily, partners have an equal right in the management and control of the partnership affairs and its property, and it is incident to partnerships of this character, that either partner should have the right to interfere to prevent the diversion of the partnership property from the legitimate business of the partnership. But as far as parties dealing with either of the partners are concerned, the intention to thus interfere should be so expressed, and be [268] evidenced by such acts, as to leave no reasonable doubt upon the subject; This right is necessary to the protection of the interests of the individual partners ; otherwise, the entire assets of the partnership might, by fraud and collusion with outside parties, be diverted from the partnership, for the benefit of a dishonest partner. In determining how -far the plaintiff could claim protection under the notice, which the auditor has found was given to the defendant, it becomes important to ascertain what claims the notice- referred to. The account that the parties were talking about at the time the notice was given was then in existence, and none other was mentioned. This notice could not be constnied as applying to claims or accounts that might thereafter accrue against Dow, and, in the absence of fraud, the plaintiff could only claim prptection against claims or accounts in existence at the time the notice was given. From the facts found by the auditor, we think the defendant was entitled to the benefit of the contract made with Dow, and hence the judgment of the county court is affirmed. Footnotes [*] S. C. 2 Aik. 386. [†] Gleason v. Allen et al. 27 Vt. 364.